Highs and lows

Eccentric Orbits: The Iridium Story. By John Bloom. Grove Atlantic; 537 pages; $27.50.

IRIDIUM was among the most ambitious projects in the history of technology. Yet it soon led to one of the world’s biggest bankruptcies. Today, 17 years on, Iridium is a remarkable comeback story: a global communications tool of last resort for soldiers, sailors and others who happen to find themselves in the nine-tenths of the world that does not have terrestrial mobile-phone reception and probably never will. The company has nearly 800,000 paying customers who generate annual revenues of more than $400m.

In the early 1990s global satellite-phone systems had investors enthralled. No fewer than ten different constellations of these systems were supposed to be built, each costing billions of dollars. If all had been launched as planned, the skies would now be teeming with what are essentially flying wireless base stations.

The most ambitious of them all, technically, was Iridium. Instead of plastering the Earth with millions of antennae, the idea went, why not put them on a constellation of satellites that could cover the entire planet with a wireless signal? John Bloom’s “Eccentric Orbits”, an exhaustive account of the plan, shows how after years of research in the late 1980s, three talented engineers at Motorola, a tech giant, found an impressive solution: 66 satellites in low orbits. Each would move at nearly 17,000 miles (27,360km) an hour 485 miles above the planet. Despite the speed, they could still communicate with each other and with handsets anywhere on Earth, meaning that a call could be routed around the planet without using a terrestrial network.

The launch of the constellation took place without major hiccup. The technology worked largely as planned, too. But as a business Iridium was a disaster: less than a year after the first commercial call the company filed for bankruptcy. It was done for by its big phones with their even bigger antennae, costing $3,795 each, calling costs of $4 per minute and a much cheaper terrestrial mobile-phone system. By the time its bosses went to the bankruptcy court in August 1999, Iridium had cost more than $6 billion to build. It had just 63,000 customers and revenues of a few million.

Not surprisingly, no deep-pocketed buyer emerged. Motorola, Iridium’s biggest shareholder and operator, would have unceremoniously destroyed the constellation had it not been for Dan Colussy, an American businessman who had previously worked for Pan Am, a now-defunct airline, and restructured United Nuclear Corporation. Almost single-handedly he persuaded a hotch-potch of investors (including an elusive Saudi prince and an American media mogul), Motorola, the Pentagon and ultimately the White House to give Iridium a second chance. In November 2000 Mr Colussy took control of Iridium for $25m.

The side plots in the book are even more interesting. One is the role of America’s military-industrial complex. Iridium would never have seen the light of day without defence spending. The communications system that links the satellites was a child of Ronald Reagan’s “Star Wars” programme. The Pentagon, which needed a portable system to communicate with troops, signed a sizeable contract that allowed Mr Colussy to convince his colleagues to invest. Incidentally, Iridium seems also to be a great global surveillance tool, suggests Mr Bloom: half-a-dozen “government operatives” were stationed at the control centre of the reborn company. (“Colussy didn’t know exactly what they did, and didn’t want to know,” he writes.)

Iridium is also a stark reminder of how rapidly tech giants can decline. A pioneer of everything from car radios to mobile phones, Motorola had been the Apple of its time. But by the time it launched the satellites, it had become a company dominated by lawyers and accountants. When it set up Iridium as a separate company, Motorola burdened the firm with a monthly operations charge of $45m—and refused to reduce it even in the face of mounting financial troubles.

Chance too played an important role in Iridium. Only off-the-shelf parts were used for the satellites, which meant that they were equipped with a fuel tank that holds about eight times as much as needed. But engineers then filled them up to the limit, a big reason why the constellation has survived until now, instead of having to be replaced after a few years. Similarly, if Mr Colussy had not joined a friend on his yacht and listened to complaints that his Iridium phone had stopped working because of Motorola’s de-orbiting plans, he would probably never have thought about buying the system.

Could the world, under the right circumstances, have ended up dominated by wireless phone systems in the sky, rather than on Earth—the original vision behind Iridium and other such systems? Perhaps. But it is hard to imagine a constellation of satellites big enough to serve billions of smartphones and other untethered devices that exist now. Instead of competing with mobile networks, satellite-phone systems have become a complement.

Most important, the Iridium story will not be over when the original constellation finally starts falling out of the sky at the end of the decade. The firm plans to launch the first next-generation satellites in September—thanks to the French government, which has guaranteed the financing. Exhausting details aside, “Eccentric Orbits” not only offers good corporate drama, but is an enlightening narrative of how new communications infrastructures often come about: with a lot of luck, government help and investors who do not ask too many questions.